Will regulatory evolution reshape the Middle Eastern construction industry?

In September 2023, we released the findings from our first Middle East sustainability survey, Building a sustainable future in the Middle East. Within this report, we identified four recommendations - centred around regulation, project lifecycles, sustainable procurement and net zero - that aim to guide the construction industry towards a sustainable future. In the run-up to COP28, we will be releasing supplementary insights exploring each of these recommendations and opportunities. This article explores how regulatory evolution could shape the construction industry as we know it.

Our recent survey revealed that most projects do not meet minimum regulatory requirements, and a perceived lack of regulation is a significant obstacle. Seventy-nine percent of respondents believe the government is responsible for driving industry-level change, highlighting the need for stringent and effective regulation to improve sustainability performance. 

Existing UAE net-zero regulations and their influence on the built environment

Global policies including the Intergovernmental Panel on Climate Change, the Paris Agreement and the UN Sustainable Development Goals (UN SDGs) continue to guide national policies across the world. The UAE has aligned its policies and commitments with several global environmental conventions, including committing to net zero by 2050 in line with the Paris Agreement. These global and national benchmarks have been translated into Emirate level policies.

“The UAE's national policies have influenced market shifts towards more efficient materials and technology, increased environmental awareness and sustainability goals. However, gaps exist in guiding sustainable building assessment, sector-specific decarbonisation approaches and addressing responsibility across asset life cycles.”

Comprehensive industry-specific regulations are crucial for achieving net-zero commitments, and benchmarking can help track carbon emissions across the built environment.

Industry challenges to adopting stringent net-zero regulations

While expressing the need for the adoption of stringent regulations, it is essential to identify some of the possible challenges and how they can be addressed.

1. Inconsistent priorities

Policy design discussions in governmental organisations have traditionally been conducted in siloed departments, focusing on defining a single programme to meet specialised demands. This leads to conflicting priorities and challenges in introducing cross-departmental regulations. However, global sustainability challenges require coordination and a holistic approach across all departments to address their complexities and widespread impact.

2. Absence of data monitoring

The UAE continues to develop at a rapid rate, but there is a lack of data monitoring to understand the source of energy usage and consumption trends across the UAE’s industries. This poses further challenges in identifying what good, and great, performance looks like in a regional context. Since consumption data can be perceived as confidential, there are several challenges associated with data transparency.

3. Energy transition hurdles in the region

The UAE heavily relies on oil and gas for its economic value, with oil and gas contributing 30 percent to its GDP and exports making up 13 percent. The UAE Circular Economy Policy 2031 aims to meet global environmental regulations and encourage renewable energy investments, but there is a need to mandate industries to track and report their carbon performance.

Transitioning to net zero through regulatory efficiency

Policy frameworks

Policy frameworks can help transition from current performance to net zero by 2050 by connecting net-zero delivery with sustainability outcomes. They facilitate a coordinated cross-departmental approach to policy management, aligning with framework goals. The UN SDGs emphasise the link between sustainability pillars and cross-sectoral action. The success of such frameworks can be seen in the UK's London Plan, demonstrating the importance of coordination and joint action in policy design.

Energy benchmarking

Energy benchmarking is a market-based tool which evaluates the performance of buildings through data monitoring and comparing against similar buildings or standards. This can be introduced as a mandatory or voluntary programme to improve the awareness of energy performance among key stakeholders and guide identification of energy efficiency improvement opportunities. NABERS is one example of successful implementation and reward from energy benchmarking.

We are currently supporting the expansion of the Emirates Green Building Council’s Benchmarking Program to apply energy and water benchmarking methodology to various key sectors across the UAE. We are hoping that the data will support in providing a baseline for new and existing buildings and support the UAE government regulatory evolution.

Reporting standards

Setting standards on greenhouse gas reporting, climate finance and performance tracking can support in improving transparency and data collection in a uniformed manner. These standards drive traceability across Scope 1, 2 and 3 emissions in order to avoid businesses prioritising one over another.

Companies such as Task Force on Climate-related Financial Disclosures (TCFD), CDP (Carbon Disclosure Project) and Global Reporting Initiative (GRI) set leading standards around the world for governments, financial markets and organisations alike to embed consistency and transparency in sustainable reporting.

A force for change

The UAE construction industry faces challenges in achieving net zero due to limited policies and lack of data monitoring. COP28 presents an opportunity for UAE and the wider region to trigger regulatory change, allowing the construction industry to understand its current position and the direction it must go.

“While long-term targets have been set, there is a need for a policy framework to guide the industry towards achieving net zero.”

This would address some of the challenges related to siloed thinking, the lack of data monitoring and transitioning from non-renewable energy sources, while driving consistency in capturing, monitoring and reporting performance.